An immediate jump in last night's after-hours session should tell you everything you need to know about Apple Inc's (NASDAQ: AAPL) Q2 earnings. Investors will have to wait a while and see how shares trade through Friday's session and into next week, but for now, the numbers could well justify a move to fresh all-time highs. 

They were starting to run into some resistance around the $170-180 mark, so they needed it. With many of their big tech peers already having reported solid, if not blowout, numbers, Wall Street would have been watching closely to see if Apple could continue the pattern of tech surprises. Let's jump in and take a look at the finer details.

The Numbers

For starters, both the company's top-line revenue and EPS topped analyst expectations, with many more bright spots appearing beyond the headline numbers. As CEO Tim Cook told investors after the release, "We are pleased to report an all-time record in Services and a March quarter record for iPhone despite the challenging macroeconomic environment and to have our installed base of active devices reach an all-time high."

These are solid records to be set after a year of rampant inflation, where consumers would be forgiven for tightening the purse strings when it came to luxury goods. As a result of this not being the case, Apple is boasting a robust operating cash flow of $28.6 billion, which fed part of the board's decision to authorize an additional $90 billion in share repurchases. In addition to this, they're also raising their dividend for the eleventh year in a row. 

These latest two updates should be enough for investors who've been just watching Apple shares to get involved. A publicly traded company can't give more apparent signals to the market that they believe their share price is trading well below fair value and are willing to put their money where their mouth is. A glance at MarketBeat's Forecast tool sees that Apple shares are rated as a Moderate Buy, and it's easy to see why, even with their shares already up more than 30% since January. 

Considering the strong performance across the board from tech in this season's earnings and then Apple's impressive update last night, you have to think that this uptrend will continue. As mentioned, shares will soon be running into some pretty heavy resistance, but they're currently less than a 10% move from new all-time highs. Of all the company's out there, you'd back Apple to make it happen. 

Getting Involved

To be sure, though, some investor skepticism remains, particularly around Apple's valuation. The team over at Baird was bullish ahead of Apple's report but flagged what they called a "valuation concern." While he reiterated their Outperform rating on the stock, analyst William Power wrote in a note to investors that "we remain positive on the long-term eco-system benefits, strong free cash flow and capital returns, and are raising our target modestly. However, with valuation vs. the S&P 500 near all-time highs, we'd also be more aggressive buyers on any pullbacks."

For context, Power noted that Apple is trading at nearly 28 times 2023's estimated earnings and 26.3 times 2024's estimated earnings. The benchmark S&P 500 index is trading at roughly 19 times estimated earnings, making this the highest premium relative to the index since 2020.

This is something investors must be mindful of, especially as this year's rally in the S&P 500 has been largely fuelled by only a handful of stocks, including Apple. A pullback there would make this layer of resistance all the tougher to break through, but as Baird said, any pullback should be aggressively bought.